Zoomlion Offers Assurances to Terex Regarding Acquisition Risks, Reuters Says

Chinese construction equipment manufacturer Zoomlion is offering assurances to Terex as the two companies negotiate following Zoomlion’s $3.4 billion offer to acquire the Westport, Conn.-based manufacturer, according to a Reuters report. The efforts come as U.S.-based firms become more hesitant of completing deals with Chinese buyers. For example, last week, Aribang Insurance Group withdrew a $14 billion bid to acquire Starwood Hotels & Resorts Worldwide after outbidding Marriott International in an effort to buy the hotel chain.

Other Chinese companies have recently failed in efforts to convince U.S. companies to abandon already-formed merger agreements. In a similar situation, Terex has an existing merger agreement with Finland’s Konecranes. Zoomlion has told Terex it will cover the risk of the acquisition being approved by the Chinese authorities, including the country’s ministry of commerce, Reuter’s sources said. Nonetheless, Terex is seeking more assurance that an agreed-upon deal will be completed and approved.

 The sources said Zoomlion’s financing banks are still conducting due diligence and the two companies have exchanged draft merger agreements. Negotiations regarding a possible breakup fee and other contingencies have not been conducted, the Reuters article said.

Zoomlion upped its offer to $3.4 billion in response to a request by Terex for a higher offer. Terex also asked for a deal with a higher likelihood of closing.

There is no announced timetable for the negotiations.

For the complete Reuters story, click here: http://uk.reuters.com/article/us-terex-m-a-zoomlion-idUKKCN0X32LI